It is the fiduciary responsibility of the directors to protect such assets…and maybe even the entire free market system, too.

The Business Roundtable, an association that counts among its members the CEOs of some of the largest public companies in America, announced this week a fundamental change in its new definition of the purpose of a corporation.

Mainstream media genuflected. Milton Friedman rolled over in his grave.Motivated By Profit

The Nobel prize-winning economist and best-selling author helped to create the predominant view that the purpose of a corporation, particularly a large, publicly-traded one, is to increase its profits. To quote Friedman:

There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.

In fact, the overriding tenet of corporate finance, present in every college textbook, states that the role of the finance manager is to increase shareholder value.

Not according to this enlightened group. By their progressive definition, a corporation is not to independently pursue profit, but rather, pursue profit congruous with social good.